China's Debt to GDP Ratio Declines for First Time in Six Years
Dou Shicong
DATE:  Sep 26 2017
/ SOURCE:  Yicai
China's Debt to GDP Ratio Declines for First Time in Six Years China's Debt to GDP Ratio Declines for First Time in Six Years

(Yicai Global) Sept. 26 -- The Chinese non-financial sector's debt to gross domestic product ratio declined in the second quarter compared with the first one. This is the first decline since 2011, JPMorgan Chase & Co. [NYSE:JPM] said in a report.

The non-financial sector's debt to GDP ratio was 268 percent in the second quarter, a drop from 269 percent in the previous quarter, Wallstreetcn.com reported yesterday. The ratio of corporate debt to net worth fell to 166 percent from 167 percent.

The government's financial deleveraging policy has effectively reduced overall credit growth, JPMorgan said. The actual growth rate of social financing scale dropped to 13.6 percent in the second quarter of this year from 17.5 percent in the first quarter of last year. The interbank lending business has slowed markedly, and policy curbed shadow banking during that period.

The supply-side reform has improved the corporate credit quality, involving measures to cut excess capacity, rectify industry and set stricter environmental standards. The demand side has also shown improvement. Investment activity in infrastructure and real estate was active. These trends have helped boost industrial profits, and state-owned enterprises are recovering their profitability at a rapid rate.

A rebound in GDP growth also contributed to the decline in the debt to GDP ratio. China's nominal GDP growth has rebounded strongly since last year. It rebounded to 11 percent in the first quarter of this year after falling to 6.4 percent in the fourth quarter of 2015.

Follow Yicai Global on
Keywords:   JPMorgan,Debt To GDP Ratio,Debt To Asset Ratio